Time To Pay Arrangement

Time To Pay Arrangement (TTPA)

When a company is in financial difficulties then one of their main creditors tends to be HMRC, typically owing money for VAT, Corporation Tax, PAYE or National Insurance.

It is a well known fact that HMRC actively chase outstanding debts and they will not hesitate taking action against a company for unpaid debts. It is not unusual for HMRC to commence legal proceedings, obtaining a county court judgment, instructing bailiffs or even issuing Winding Up Petitions.

In order to avoid any action taken by HMRC, it is always advised to have open dialogue with them and try to come to an arrangement to pay off any arrears by instalments. This informal arrangement is called a Time To Pay Arrangement.

A Time To Pay Arrangement will usually be an agreement to pay an agreed set amount on a monthly basis and typically lasts between 6-12 months. It is very unlikely that HMRC will enter into a Time To Pay Arrangement if you have previously defaulted on one or if you have a poor payment history with them. Having said that, if you normally have a good payment history with HMRC and you find yourself in an unusual situation then it is most likely that HMRC will agree to a Time To Pay Arrangement and this may be the best way to clear any debts.

Advantages of a Time To Pay Arrangement:

  • Allows a company to continue trading

  • Does not affect company's credit rating

  • One affordable monthly repayment typically over a period of 6-12 months

  • Most likely to be agreed if company has good payment history with HMRC

 

Disadvantages of a Company Voluntary Arrangement:

  • HMRC may withdraw their agreement if you miss a payment, mislead or falsify records or if they believe the company's situation may have improved (i.e. large VAT return which suggests revenue has increased)

  • HMRC are unlikely to allow a Time To Pay Arrangement to exceed 12 months therefore depending on the amount owed, the monthly instalments may be unaffordable

  • HRMC are unlikely to allow a Time To Pay Arrangement if you have a poor payment history with them.

 

If you believe the company can pay its debts and all it needs is some extended time to repay HMRC then a Time To Pay Arrangement may be the solution you require.

It is important as a Director, that if you believe your company may be insolvent, then you seek professional support as soon as possible. Do not delay this as it may have serious implications against the Directors.

 

For help on this and other matters please feel free to contact us.